CARSON CITY — Three members of a state board overseeing Nevada’s homeowners associations have been replaced by Gov. Brian Sandoval, but a state official said Wednesday it has nothing to do with a dispute over the ability of collection agencies to recover costs on foreclosed homeowners association properties.
Chairman Randolph Watkins and members Robert Schwenk and Gary Lein are no longer serving on the board after a meeting last week in which they opposed a motion to set aside a 2010 opinion by the Commission for Common-Interest Communities and Condominium Hotels. The opinion said collection agencies could collect fees and costs when foreclosed properties were sold.
The item was on the agenda of the commission’s February meeting after the attorney general said Feb. 14 the commission had no authority to issue its own advisory opinions on such matters.
The commission opinion conflicted with an advisory opinion by the Real Estate Division, which oversees the commission, that said Nevada state law does not allow collection agencies to recover fees and costs in foreclosure actions.
Commissioner Jonathan Friedrich, who represents homeowners on the board, sought a vote Feb. 27 to rescind the commission’s opinion. The motion failed on a 3-3 vote with one member absent. Voting against the motion were Watkins, Schwenk and Lein. Watkins represented developers on the board, Lein was an accountant representative, and Schwenk represented association managers.
The two homeowner representatives and the attorney representative voted for the motion.
Friedrich said the three members were replaced after the meeting.
Bruce Breslow, director of the Nevada Department of Business and Industry, which includes the Real Estate Division, said the timing of the appointments had nothing to do with any issues in front of the board.
The new members appointed by Sandoval, all from Clark County, are James Rizzi, representing developers; Courtney Grossa, representing managers; and Eric Lorenz, an accountant.
Chief Deputy Attorney General Gina Session said the 2010 commission advisory opinion is invalid whether the commission votes to withdraw it or not.
The lien issue pits dozens of homeowners associations that want to collect the costs and fees, with nine months of association dues, as part of a super-priority lien versus investors buying foreclosed properties who argue the additional charges are not legal.
The costs can be significant. Nine months of past dues might result in a $900 lien, but fees and costs can raise it by several thousand dollars.
The super-priority lien issue remains unresolved but is making its way through the courts. The Nevada Supreme Court is scheduled to address the lien issue at an oral argument on a case in early May.
Friedrich, who is also a candidate for state Assembly District 10 in Las Vegas, said his concern is how the commission was allowed to adopt an opinion in violation of state law in the first place.
The now invalidated commission advisory opinion has been used by associations and collection companies to further their efforts to bring in millions of dollars in fees and costs that are precluded by state law, he said.
The 2010 commission-sponsored advisory opinion allowing the fees and costs to be collected was drafted by the then-chairman of the commission, attorney Michael Buckley.
According to the Nevada attorney general’s office, which has initiated a lawsuit in Clark County District Court to stop the fee and cost collections by collection agencies, the opinion was sought by RMI Management, a homeowners association management company, which sought clarification on the issue.
Buckley provided the draft advisory opinion to the rest of the commission but abstained from voting because his law firm was hired to provide legal services to RMI Management, the attorney general’s lawsuit said.
Buckley said Wednesday the deputy attorney general advising the commission suggested it not adopt the advisory opinion because the issue was being litigated and would be decided by the Legislature or the courts. “In retrospect that makes a lot of sense,” he said.
But Buckley also noted that all of the legal opinions on the issue are advisory in nature until the Nevada Supreme Court makes a final determination.
Contact Capital Bureau reporter Sean Whaley at firstname.lastname@example.org or 775-687-3900. Follow him on Twitter @seanw801.